Experts predict drop in gasoline prices

August 31, 2006|By ED RONCO Tribune Staff Writer

Here's some good news as you pack the car and hit the road for the Labor Day weekend: Gas prices have eased slightly and more relief is on the way. Prices could dip as low as $2 to $2.50 a gallon “in the coming months,” according to Tom Kloza, oil prices analyst with the Oil Price Information Service in New Jersey. “I think that's where the bottom will be, nationally,” he said. “You have to remember something — last year when we went up to $3.057, we dropped all the way to $2.12 on Thanksgiving weekend.” Hurricanes Katrina and Rita, which halted oil refineries and platforms in and around the Gulf of Mexico, did more damage to U.S. refining than the storms of the last 25 years, Kloza said. So far this year, that hasn't been an issue. Gas prices started rising sharply last summer and hit as high as $3 because the storms knocked out refining capacity in the Gulf Coast. Some experts predicted we were going to hit as high as $3.50 this year. Although prices did cross the $3 mark again this summer, the $3.50 prophecy was never fulfilled. On average this year, Americans paid $175 million more each day for gasoline than the same day a year ago. “For the first time in a long time, next week, we're going to be able to say, ‘Wow, we're paying $100 million a day less than we were in 2005,” Kloza said. “Unless one of these geopolitical possibilities really rears its head — whether there's some craziness out of Venezuela or Iran — the worst is over.” But Kloza's predictions of $2 to $2.50 a gallon might be a little optimistic, said Jim Ostroff associate editor of Kiplinger Washington Editors, which issues economic forecasts and financial advice. “It was within very recent memory when people cringed when gas prices went above $2 a gallon,” Ostroff said. “And now, it would be deliverance.” Pump prices will likely end the year between $2.70 and $2.75 a gallon, he said. Gas prices ended this week in the South Bend area between $2.65 and $2.70 a gallon. But even if the price of a barrel of oil dips as low as $65a barrel by December, it's still $10 a barrel higher than oil a year ago, Ostroff said. Hey, relief is relief, said Brenda Lyons of Niles, who was filling her silver Toyota with gas at a Phillips 66 station in Roseland on Wednesday. Lyons commutes 8 miles one way to her job at Memorial Hospital, and another 19 miles one way to church every week in Three Oaks. Other than that, she doesn't do a lot of traveling. Still, she looks forward to lower prices. “That would be wonderful,” she said. The positive predictions don't impress Tim Holewczynski of New Carlisle. “It's going to be short-lived,” he said. Oil companies can do pretty much whatever they want, he said. Holewczynski commutes 25 miles one way every day to Holy Cross College, where he's a student. He also works in South Bend, so even when he doesn't have classes, he's making the drive. “It's a huge deal to me,” he said, standing near his red Oldsmobile Alero parked at a pump. “Half my income goes to gas.” Staff writer Ed Ronco: eronco@sbtinfo.com (574) 235-6467